United Airlines To Pay $49M To Resolve Mail Fraud Claims
WASHINGTON—United Airlines will pay the U.S. Justice Department (DOJ) $49 million to resolve criminal charges and civil claims stemming from fraud related to its mail-delivery contracts with the U.S. Postal Service (USPS).
The $49 million sum includes $17.3 million in criminal penalties related to a non-prosecution agreement reached with the DOJ Criminal Division’s Fraud Section, and a $32.2 million penalty related to a False Claims Act settlement with the Commercial Litigation Branch of the DOJ’s Civil Division.
“United was entrusted by the U.S. Postal Service with fulfilling a critical government function—the transportation of U.S. mail abroad,” said Nicholas McQuaid, acting assistant attorney general with the DOJ’s criminal division. “Instead of performing this duty with transparency, United defrauded the U.S. Postal Service by providing falsified parcel delivery information over a period of years and accepting millions of dollars of payments to which the company was not entitled.”
The penalties stem from United’s International Commercial Air (ICAIR) contracts with USPS, by which it transports mail internationally to foreign posts and U.S. military bases. Those contracts require carriers to provide USPS with bar code scans of mail receptacles, both at the time of receipt and delivery. The Chicago-based carrier was entitled to full payment under the ICAIR contracts only if the mail scans were provided in an accurate and timely manner.
Between 2012 and 2015, United admitted it engaged in a scheme to defraud USPS through the submission of fraudulent data that made it seem like the carrier and its partner airlines were satisfying the ICAIR contract requirements. Rather than submit accurate mail scan data, United provided automated scans based on “aspirational” delivery times, resulting in millions of dollars in unearned payments from USPS, the DOJ said.
Additionally, the DOJ said United actively concealed problems related to scanning mail movements from USPS even after they became known within the company. Attempts by United employees to hide the mail scheme included “efforts to revise the falsified delivery times to make the automated scans appear less suspicious to USPS.”
“Companies that do business with the U.S. must adhere to their contractual obligations,” said Brian Boynton, acting assistant attorney general with DOJ’s Civil Division. “The DOJ will pursue those who knowingly fail to provide the government with the goods or services for which it has paid and that it is entitled to receive.”
A spokesman for United called the USPS a “valued customer,” adding the company is “glad to have remedied these procedures and looks forward to serving the Postal Service in the future.”